How Michigan Embezzlment Charges are Investigated

November 5, 2012

Embezzlement cases have always been a large part of my Criminal Practice. Having handled countless Embezzlement charges in Macomb, Oakland and Wayne Counties, I've grown to like them. I have written a number of Embezzlement articles on this blog, and have given the subject a concise overview on my website. Instead of rehashing the whole process of being contacted by a Police Detective (or Loss Prevention person from a company) and how to assert your right to not incriminate yourself, all the way to how these cases are usually resolved, this article will focus more on why the investigation into an allegation of embezzlement is usually quite different in character from the investigation into any other alleged Criminal Offense.

In the first instance, there is almost never a situation where the Police discover "Embezzlement" without there having first been a report from an outside source. Other kinds of Criminal charges, such as DUI, or Possession of Controlled Substances, or even Indecent Exposure, are discovered, or "happened upon" by the Police as part of their routine patrols. That doesn't happen with Embezzlement.

Most often, an employer suspects Embezzlement by an employee after the discovery of something "strange." Here is where the scenarios can be all over the map. In some cases, a little "skimming" may have gone unnoticed for years and years. In other cases, a suspected monetary shortfall is questioned, and irregularities turn up. Embezzlement charges can involve things from unauthorized charges on an employee charge card or expense account, to the distribution of funds through bogus checks, sales commissions paid, or merchandise obtained from "fake" sales, as well as just about anything else you can imagine where merchandise, money or "value" has been diverted from the employer.

Whatever else, Embezzlement charges arise because something "irregular" is noticed. I've seen cases where the person in a particular position has been out sick, or transferred to another duty, and the new person covering their old position, in trying to figure out how to do things, has discovered that things don't quite add up. Sometime, a business, while conducting an audit, finds the "blackjack math." However it is found out, someone, somewhere, spots some detail that doesn't seem right, and that becomes the spark that leads to a further inquiry.

Once that further inquiry begins, things usually fall together pretty quickly. Over the years, I've received loads of calls from people rather nervous about being contacted by their boss, or some "superior" from their company. As I explore what's going on, I learn that usually, some financial irregularity has been discovered, and the employer has decided to dig deeper into things. Often, the person at the center of it all is hoping to come up with a sufficient explanation to cause the matter to be dropped, but in real life, that never happens. Once an employer finds that the math doesn't add up, they'll keep looking. After all, it's not as if an employer finds out that its bank balance has been inexplicably credited with extra money from some unknown source. Once any normal person catches a whiff that they're being shorted, they'll follow that scent to wherever it leads.

At the point that an employer suspects someone particular of Embezzlement, things can go in many different directions. In a smaller workplace, there is often an immediate confrontation with the suspected employee. In larger companies, the employee may have no idea he or she is being investigated. Companies large enough to have a Loss Prevention Department may set up surveillance of the person, and let them continue to work, unaware that their actions are being closely watched.

Other times, an investigation may have started before a person is ever contacted. Then, seemingly out of the blue, they receive a call from their boss, or Loss Prevention (or a Police Detective). They might be asked to come in on a day off, or told that they otherwise need to meet with someone. This is where things get tricky...

One of the most fundamental principles of Criminal Law and Procedure in the United States is the recognition of a person's Constitutional Rights. Everyone knows they have a right to privacy, and the freedom of religion, and of speech. Anyone who has ever watched TV knows that a person has the "right to remain silent," meaning a right against self-incrimination. No one can be compelled to be a witness against himself or herself, or to give self-incriminating statements.

The Police must advise a person of their Rights after Arrest, and cannot continue to question a person once the person asks for a Lawyer. These rights are held sacred.

But they don't apply when a private individual is questioning a person.

These Rights are protections against "state action," meaning the actions of the Official Police, or some agent of the government. The Police cannot invade your privacy, nor can they fail to advise you, during questioning, of your right to remain silent. If you assert that right, they must respect it. Loss prevention, however, is not the Police. They can use whatever tactics they want to make you talk, and nothing you say can be tossed out for an alleged violation of your rights if it wasn't the Police who got you talking.

This means that private individuals can threaten you, or scare you, or tell you that if you don't "fess up" they will take you to the Police and charge you, and make sure you get sent to prison and never see your children again. And if you fall for that, you have no recourse against them. You cannot use "coercion" as a defense to any confession you write out for Loss Prevention, or anyone, for that matter, who is not the Official Police, no matter how they obtained it.

If that sounds harsh, then you need to hear the other half of the story:

As much as someone in a Loss Prevention capacity can say anything to scare you into cooperating against yourself, they have NO legal power to actually do ANYTHING, except go to the Official Police. A person can tell them to "shove it" in response to anything they ask or say, and they cannot do a thing about it. You DO NOT have to "go in" and meet with them. You do not have to write anything, and you don't even have to talk with them. This is the Law. But they know the Law, too, so they try to work around it and generally either scare a person into "cooperating," or make it sound like things will be much better if a person does. Remember, their ONLY recourse, whether you cooperate or not, is to go to the Police. They cannot charge anyone with a crime; only the Police can. They cannot Arrest or detain anyone; only the Police can. They cannot "drop" or reduce any charges brought by the Police and Prosecutor. Once charges are brought, the employer officially becomes the "complaining witness." They have no power to do anything except show up in Court when they are Subpoenaed.

Rather often, the person doing the calling from a Loss Prevention Department is a retired or former Police Officer. They know how to question a suspect, and they know how to put things in a way to get someone to talk, especially someone who is scared. They are experts at rounding someone up to come in and talk, under threat or fear of getting locked up, or under the promise of making things better. Their ONLY goal is to tie up the loose ends of a case so that they can hand it off to the Police, all neatly packaged with a confession, and then perhaps make an insurance claim to recoup the company's losses.

The best thing to tell them is nothing. They cannot come out and Arrest anyone, nor can they have the Police do that until the Police have investigated and obtained a Warrant. Most often, Loss Prevention wants precisely the incriminating information directly from the suspected employee they need to make a case and hand if off to the Police to get a Warrant. They NEVER call to help the person under suspicion.

In most Embezzlement cases, the Police DO NOT do the math, or handle the accounting. Instead, they might review and verify (to the extent they really can) what's presented to them, but can you imagine an employer calling the Police and saying something like "I think one of my employees is writing phony checks. Would you send out a Detective to review my books?" Of course not! When the Police are called, they are usually presented with evidence of a crime as soon as they arrive: A broken door lock evidences a Breaking and Entering, or a smashed window evidences vandalism.

As it turns out in the real world, many people read my articles AFTER they've already talked to their employer, or its Loss Prevention people, and then call me and ask how bad it is if they've already "talked." Even if they have, I can still make things much better. Forget those nightmares about a jumpsuit and a cellmate. I can make sure that doesn't happen.

If the reader has been contacted, but not yet said anything, the best thing to do is keep quiet. This is the best legal advice one can get, and it's also free: Don't say anything. In the history of this country, the reader will not find one instance where a Lawyer has ever advised his or her Client to do anything except remain silent. Some people pay a lot of money to very high profile Lawyers before they'll believe it, but it doesn't change the fact that there is NOTHING you're going to say that is going to do anything but make things worse.

Despite that, some people have an ill-timed "crisis of conscience" once they're contacted, and, in an effort to "get if off their chest," will admit to everything. Sometimes, there are compelling circumstances underlying why a person did what they did. Maybe "Little Timmy" needed a life-saving operation; that's an explanation, but not an excuse, and "Little Timmy's" mom will still get charged with Embezzlement if she diverted some of her employer's goods or money to help pay for it. The point is simple; shut up. Period.

No one from the employer can "bring" charges. Only the Police have the power to "get a Warrant." The Employer can do nothing to you except call the Police. Ironically, and as I've pointed out in my other articles, once the Police start telling a person that if he or she doesn't come in, they'll "go get a Warrant," that means they already have enough information to get one, anyway. In almost such circumstances, they're just looking for a confession, or some confirmation in order to make the case airtight. Even so, on the off chance that they are missing some critical detail, what's the payoff in giving it to them? Again, we circle back to that same priceless but free bit of legal advice: Keep quiet.

No employer has any legal power to do anything except run to the Police. It is really no different than if you return home to find some of your belongings stolen. Even if the thief is a supposed friend or neighbor, and even if he dropped his wallet and cell-phone in your house, and you have 100% proof that he stole your property, what can you do about it, at least legally? Nothing. The only thing you can do is to turn over your information and "proof" to the Police. The same holds true in an Embezzlement case.

Embezzlement cases are almost always "wrapped up" by the time the Police are called in. Once an employer begins digging, they don't usually stop until they discover everything. I've seen cases where outside experts, most often auditors or accountants, get involved, and, like an archeologist, they reconstruct the past from the clues left in the present. I've also seen banks become part of the inquiry, sending over copies of checks cashed over how many ever years the employer is investigating. Once the math has been checked, and re-checked, the Police are given a pretty airtight package. In essence, they have their homework done for them. That package is often made more airtight because the person suspected has contributed to the investigation by talking. Even if a person admits to nothing, saying anything at all does no good. While remaining silent may not make the case crumble, or disappear, there is nothing to be said that is of any help at all, ever.

In the final analysis, an Embezzlement case is certainly a Criminal case, but it is very different specialized kind of Criminal case that rather often follows a very different path to the Police Station and though the Courthouse than any other.